Urgent help required regarding loan repayment demands

qubit_2

Hi all,

The story (it's a bit lengthy but please bear with me) is as follows:

About 3 years ago my father-in-law took out a 20k unsecured loan from Lloyds - he took this with a protection policy. About a year later he was dismissed from his job (he had given sales reps examples of products without permission). Obviously the protection payment policy did not cover being dismissed.

He was 60 at the time so went on a downward spiral - hit the alcohol then lost his driving licence etc etc. He was then diagnosed with severe depression. I suspect he buried his head in the sand and stopped paying loan, credit card payments etc. Anyway, this has come to a head over the last few months, my mother-in-law found some hidden demands etc and in August (approx 8 weeks ago) she found a final demand from Lloyds demanding the 15k he owed or court proceedings would be started. After a frantic call to my wife (whilst we were on holiday) it was decided that they would pay 3k off the loan to give them some breathing space. After we got back from the holiday my father-in-law was in a bad way. Fully blown alcoholic, still depressed etc etc and didn't feel able to call the Lloyds collection representative himself so my wife took it upon herself to do it and see what could be sorted.

She callled him and asked would they consider an offer and we would somehow raise the money to take the stress of the in-laws. He told my wife that my father-in-law had been rude in previous correspondence etc (stupidly stating they had collateral in the house) but asked what we would offer. She told him that the most we could raise would be 6k and this would be via a loan from my mum as we couldn't afford it ourselves. he almost laughed at her and said there would be no way Lloyds would agree to anyhting less then 11k - but my wife said that would be all we could do so asked him to put the offer to Lloyds anyway.

He came back a few days later and said lloyds would be willing to accept £7,156.33 (or something specific like that) so my wife asked him to put that in writing and we would start the ball rolling.

Since then, my father-in-law has been rushed to hospital (looks like it could be very serious - maybe lung cancer though we are waiting for the results which should be in by Wednesday).

We received the letter last Friday but it states that the amount would be acceptable providing it was recieved by the 24th September. Unfortunately, my mum needs to cash in part of an endowment to lend us the money which could take several weeks.

So my wife just rang the Lloyds payment rep, explaining the situation (including the fact her dad was seriously ill) and said that they would get the money but it could take a few weeks. She has just phoned me in tears because apparently he started to get very shirty (saying that two deadlines had passed already and he's stuck his neck out to lloyds etc etc) .

That prompted me to post this to see if anyone has any advice on what we should do - there is no way we can raise the money until my mums endowment comes through.

If the worst happens and my father-in-law dies, could they still demand the money via my wife's mum?

Just to add to the mess, he also owes about 5k on a credit card though they haven't started any demands yet.

Many thanks for any advice you can offer.

jonesMUFCforever

Don't accuse me of being morbid here but if he took out PPI it may not have covered him because he lost his job (did he claim anyway?) but it should cover him in death.

Sorry I can't find any other way of putting it.
So if he never actually cancelled the PPI then it might be of some use some day.

mrmajika

Further to ejones999 post above, if your Father in Law does in fact have lung cancer, then this is a 'critical illness'. The PPI policy pays out the full loan amount on diagnosis of a critical illness. That is, a full £20k, irrespective of where he is in the loan term. That would clear the full loan balance plus give extra cash.

The only problem you may face, if he is in arrears, then the insurance premiums may be classed as unpaid and so may not pay out.

regularsaver1

they could look as "first known instance" which was the dismissal

and like mrmajika said, the ppi may be invalid if in arrears

petermb_2

I dont think the payment protection can be invalidated if the loan is in arrears. The whole point of these policies are that they were paid with a single premium. The policy itself therefore cannot be in arrears in any circumstance.
If either the lender or the insurance company tries to claim this they have had payments and interest under false pretences.

petermb_2

Sorry to get to the first point. If the borrower is now ill I would think that is a reasonable reason to claim on the policy. If he is as seriously ill as you imply then there should be pay out.

qubit_2

Many thanks guys. I assumed that if he defaulted on his loan payments the PPI would automatically be cancelled...maybe that's why the collection guy was getting so shirty when my wife explained her father was ill??

What if he tried to claim when he was dismissed and was refused? would that have any effect on the policy?

We've got all his paperwork at our house so i will have a good look at the PPI policy.

Cheers,
Kieron

jonesMUFCforever

In the circumstances I definitely would not make any lump sum repayments as this would be money down the drain if the PPI pays out.
By all means try to continue the monthly payments but don't pay a lump sum.
You also need to tell the bank about the illness so that the claim can proceed.
Good luck.

Tootsie_Roll

qubit wrote: »

What if he tried to claim when he was dismissed and was refused? would that have any effect on the policy?

It shouldn't have any effect on the subsequent claim under the 'illness' cover of the policy.

Do you know if he did claim or not. You state in your initial post 'Obviously the protection payment policy did not cover being dismissed'. In my experience the unemployment cover is only invalidated if he was sacked for gross misconduct otherwise just being sacked or losing your job is covered so he may still lhave a valid claim. The main criteria for claiming is he has to be signing on.